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[2010] ZALCD 3
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Randles v Chemical Specialities Ltd (D42/2010) [2010] ZALCD 3 (5 February 2010)
IN
THE LABOUR COURT OF SOUTH AFRICA
HELD
IN DURBAN
D
42/2010
REPORTABLE
In
the matter between:
DAVID JOHN RANDLES
APPLICANT
And
CHEMICAL SPECIALITIES
Ltd RESPONDENT
JUDGEMENT
CELE
J
INTRODUCTION
[1]
This is an application brought on urgent basis in terms of section
158 (1) (a) of the Labour Relations Act 66 of 1995 (the Act)
for an
order in the following terms:
Ø
that the respondent is interdicted from proceeding with any
disciplinary action or enquiry against the applicant on the
charges
as set out in its charge sheet against the applicant of 20 January
2010, pending the outcome of a dispute referred to the
Commission for
Conciliation Mediation and Arbitration, and if the conciliation does
not resolve the dispute, pending the adjudication
of that dispute by
the Labour Court;
Ø
directing that the respondent pays the costs of this application.
[2]
The application is essentially premised on the submission that the
applicant made a disclosure in terms of the
Protected Disclosures Act
26 of 2000
and is being subjected to an occupational detriment on
account or partly on account of having made such a protected
disclosure.
[3]
The application has been opposed by the respondent basically on two
grounds namely that:
Ø
the applicant has not satisfied the several legal requirements (facta
probanda) for the relief under the
Protected Disclosures Act (PDA
)
and;
Ø
the respondent disputes the applicant’s entitlement to rely on
the PDA.
[4]
Initially the applicant had sought a declaratory order on the basis
of the PDA but abandoned it during the hearing of the application,
making any further reference to it then unnecessary.
[5]
Most of the facts in this application are common cause between the
parties and, to the extent that they are germane in the resolution
of
the issues in the application, shall thereafter be briefly outlined.
BACKGROUND
FACTS
[6]
The applicant commenced his employment with the respondent on 1 April
2006 in the position of Group Legal Counsel, in terms
of a written
contract of employment, the drawing of which he was a party to. He
had been an attorney for years, practising law
at Shepstone and Wylie
before he joined the respondent. Soon after his engagement he
accepted the appointment as one of the respondent’s
Directors.
As a Director he had among others, the responsibilities for:
Ø
ensuring that the respondent, here after referred to as the company,
keeps adequate accounting records;
Ø
the selection and application of appropriate accounting policies
Ø
safeguarding of assets and for preparing financial statements that
fairly present the financial position, results of operations
and cash
flows of the company in accordance with International Financial
Reporting Standards;
Ø
the establishment and maintenance of an internal control structure,
necessary to provide reasonable assurance that adopted
policies and
prescribed procedures are adhered to, for the prevention of errors
and irregularities, including fraud and illegal
acts;
Ø
ensuring that the company complies with all relevant statutory and
regulatory requirements, including but not limited to
the
requirements of the Prevention of Organised Crime Act, the Financial
Intelligence Centre Act and the Corruption Practices Act;
Ø
for checking all legal agreements concluded with the company prior to
signature. He was the custodian of such legal agreements.
[7]
On 6 November 2007 the company was listed with the Johannesburg Stock
Exchange (JSE) and so underwent a transformation from
being a private
ownership to public ownership. It was no longer a shareholder run
company but its Directors became custodians of
the Shareholders’
investment.
[8]
When the applicant joined the company, its Finance Director was a Mr
Jonathan Maehler. Towards the end of 2008, Mr Maehler tendered
his
resignation letter to the company. While such resignation was still
pending, he issued a letter dated 21 November 2008 entitled
“Matters
for the attention of the Board”. In that letter, (which he
directed to Mr Strath Wood) he outlined 6 matters
of concern to him
and briefly explained their nature, being:
Ø
BASF debtor: - over R 7 million remaining in the company books
unpaid,
Ø
Conspec debtor : - over R 1 million remained unpaid,
Ø
Bank facilities and securities: - a double cession of book debts by
Nedbank and RMB,
Ø
Sale of the Canelands Property: - a claim of Mr Dough Ross in
relation to the purchase of this property,
Ø
Director’s loan: - there was an amount owed to the company by
Mr Strath Wood.
Ø
Transactions that have been questioned by staff: - these relate to
Crossmore Transport and property rentals ,
Ø
Corporate governance: - relate to lack of disclosure at board of
directors’ level and levels of authority,
[9]
The letter concludes with the following remarks:
“
I
have not gone into great details in dealing with the matters above
and there is further background but this will hopefully be
more fully
discussed at a directors meeting. In addition, there may well be
further information that other members of the board
have or may want
to discuss with you or other matters that should be raised for
discussion. I strongly believe that you have a
good board that wish
to be fully involved and appraised and who will welcome the
opportunity to assist in moving forward.
These
matters are not critical to the success of Chemspec but they are of
serious nature and also need to be resolved by the board
of
directors. Leaving them unresolved for long periods of time has also
made matters more difficult.
I
sincerely hope that this can be successfully resolved along with
other matters which will undoubtedly arise from time to time
as
Chemspec has such great potential into the future”.
[10]
For sometime Mr Wood operated a loan account with the company.
Company rules allowed its Directors to operate such loan accounts.
Mr
Wood subsequently purchased a helicopter which was financed through
Wesbank. He had a son who was a cadet training so as to
qualify for
his license.
[11]
On 1 November 2008 the company took occupation of showroom Los-Villa
Commercial Park at Crf 2582, Garlicks Drive, Ballito Business
Park
for purposes of distributing its paint. The occupation was in terms
of an agreement of lease entered into between the company,
represented by the applicant, and another company called Dreamworld
Investments 228 (Pty) Ltd. In terms of the lease agreement,
the
commencement date was 1 December 2008 and termination of the lease
was agreed to be 30 November 2013. The applicant was also
representing the company in an addendum to the same agreement of
lease which addendum is dated 2 April 2009.
[12]
Sometime around early 2009 two e-mails were anonymously sent to a Mr
Neil Page who was a major shareholder of the company.
Various issues
were outlined in such e-mails as complaints about the running of the
company and about the personal travelling of
and the purchase of the
helicopter by Mr Wood. Mr Wood’s response to the anonymous
e-mails was drafted by the applicant and
was forwarded to Mr Page who
thanked Mr Wood for a detailed response and for doing an “excellent
job”.
[13]
Sometime in the first half of 2009 relations between the applicant
and Mr Wood took a turn for the worst. The dispute between
them was
about a share entitlement of the applicant in the company. In May
2009 the applicant sent an e-mail to Mr Wood informing
him of his
intention to resign on the same day as a Director of the company due
to the dispute on share entitlement. He did subsequently
resign but
retained his position as an employee of the company. In his undated
letter of resignation as a Director received on
18/05/2009 he
indicated that it would be in appropriate to resign without giving
the board reasons for that decision. The first
of these relate to the
share dispute. From paragraph 16 to the end, his reasons are:
“
16.
The questions raised by the FD, Jonathan Maehler when he resigned,
have not
been adequately explained to the board. It was resolved that
Strath would write a letter to the board to explain those matters in
January. He has not done so.
17.
Those matters concern me as well and I now make the point that the
board needs explanations.
The derby downs lease, the transport
contract as between Chemspec, circle feet, and Crossmoor, the double
cession of debtors, and
loan accounts have never been dealt with at
board level.
18.
The FD raised the question of corporate governance, and the lack of
disclosure. I share
those sentiments. I have not been able to call
board meetings and was soundly put my place last year when I called a
meeting having
been told that Strath was CEO and he would decide when
we met. We last met in January 2009.
19.
The actions of the CEO are by and large secretive and not inclusive
agreements are signed
before resolutions are passed and the company
and the board are thereby prejudiced. Information comes on a need to
know basis.
20.
The CEO has not attended the induction course which is a compulsory
JSE requirement.
21.
The management of the company creditors in the past 5 months in my
opinion has exposed us
to risk. My advice was ignored as it often is.
22.
The company (and the CEO) is dragged into litigation that causes
significant embarrassment.
23.
The interference in the Cameron Davidson affair very nearly caused my
resignation earlier
this year. He was charged with a number of counts
of theft and I was engaged to deal with the matter. I was very
satisfied that
we had a very strong case against him, and suspended
him. He was behind my back reinstated by the CEO. He undermined my
authority.
24.
Davidson was then told on three occasions not to attend the enquiry
that was adjourned despite
being properly adjourned. I was never
informed of the adjournments. We met earlier this year and despite my
protestations and an
e-mail to the CEO that we proceed Davidson was
moved to the Pinetown Branch. I reacted to this information when I
saw him there
one day recently and he then resigned, I believe he is
the son of the CEOs closest friend.
25.
In general the following cause grave concern. I make these
observations here because after
this resignation I am not sure that
my views will be considered:
Delaying
board meetings;
Irregular
contact with directors and executives;
Chairman,
CEO and MD one and the same;
Autocratic
approach to managing the business;
Poor
transparency;
High
staff turnover;
Poor
morale;
Customer
complaints;
Cash
flow crisis;
Loss
of customers.”
26.
This is not a resignation from my employment.
[14]
On 2 July 2009 the applicant instituted a civil claim at the High
Court against Mr Wood for his share entitlement.
[15]
On 4 August 2009 the applicant issued a 10 page document entitled “to
whom it may concern” and he sent it to the
board of the
company. The document deals with various issues of his concern and
reads:
“
1.
This is a report (and a Protected Disclosure) to the Audit committee
and the Board
on activities in the affairs of Chemical Specialities
(CS) that in my opinion contravene the law, or the Code of Ethics
(copy attached),
or King II or the standards of good corporate
governance that CS supports to adhere to its annual reports.
2.
This report would ordinarily have been referred to the chairman only,
if he was independent,
but given that we have a chairman, CEO and MD
(bad corporate governance in itself) as one and the same person, I am
directing this
disclosure to the entire board since I am of the view,
and have been advised, that I am legally obliged in the circumstances
to
do so.
10.
After my resignation in mid May, and in mid June 09, having made
enquiries about the delay
in the presentation of the financial
statements I was informed that one of the reasons for the delay had
been the ‘adjustment’
needed to be made to the loan
account of Strath Wood, the CEO.
11.
I made further enquiries and gathered he had a debit loan account of
‘many hundreds
of thousands of rand’s mostly for his
family overseas travel incurred early in the financial year. I
queried this with Jonathan
(now employed as a consultant) who told me
he was busy with the adjustments and took the view that there was
nothing irregular
about the accounts.
12.
A few days later I was informed that the loan account had been
‘adjusted’ and
was now a nil balance account. I enquired
and was informed that Strath had recently paid Tony (Bugatti Trading)
personally about
R500 000 or R600 000 for work done and he needed to
be repaid. This was journalized against the loan account and
ultimately when
all adjustments had been applied there was still a
debit balance of R49 000 odd owing to the company.
14.
My first concern is that section 226 of the Companies Act has been
breached.
15.
The auditors raised the issue of debit loan accounts in the report to
the audit committee
for their meeting on 23
rd
June 2009.
According to their report the resolution of this matter is recorded
as follows ‘This was resolved. The loan was
not a debit loan.
Strath Wood had made payments personally to Bugatti Trading which had
not been accounted for’. There is
no mention of the salary and
the other movements of the account. The minutes reveal no discussion
on the subject whatsoever. There
is no note in the signed financial
statements about this either (section 295 of the Companies Act
refers).
16.
Shareholders are accordingly oblivious to the use of the loan account
to fund private expenditure
and the breach of Companies Act. I am the
shareholder by virtue of my contract with Strath for shares not yet
transferred despite
demand (we are in dispute over the quantum). As a
shareholder, past director and employee I am deeply concerned about
the above.
I spoke to Jonathan about this when it came to my
attention in June 2009 and his response was that there was nothing to
worry about
because there was no loan account. Then he said the
account now has a nil balance. When I said the Act has been breached
his attitude
was ‘well there is no prejudice’, so what
was I worrying about. I got a similar response from within the
office. There
appears to be no appreciation for the law and the
breach of it. I gather that this might have happened last year
financial year
as well.
17.
The extra salary is also intriguing. We have a remuneration committee
(it consists of the
audit committee in reverse-that that is the non
execs) who are empowered to make recommendations about executive
remuneration to
the board for approval (their charter is attached).
This did not happen here and a decision was made about this
‘increase’
or bonus to the CEO without authority and
simply to expunge the debit loan account.
18.
Commissions earned by the CEO have nearly doubled to R900 000+ in the
2009 year. (R468 000
in 2008 to R956 000) I do not recall any
agreement on this remuneration during my term as a Director. In fact
I was informed by
the CEO that for this year executives would receive
no receive no increase whatsoever and no bonuses. If you review my
earnings
in the financial statements you will see no increase for me
at all. There is no remuneration committee recommendation on this
matter
either. The accounts do however reveal a bonus paid to me.
This is factually incorrect since it is a 13
th
cheque
guaranteed by my employment contract”.
[16]
He then dealt extensively with his concerns about poor corporate
governance of the company. The board responded by undertaking
to
investigate the complaints.
[17]
In the meantime Mr Wood gave instructions to have some investigations
conducted on the applicant with particular reference
to his salary
structure and to the lease agreements executed by him for the
company. In relation to the lease agreement it was
established that
the applicant had signed certain lease agreements without first
obtaining a resolution of the company authorizing
him to do so. This
was a practice that had been carried out by the company but a
directive have been issued earlier to desist the
practice. On 21
August 2009 the company instructed the applicant to take 3 days
special leave to allow investigations against him
to proceed without
his hindrance.
[18]
Investigations into applicant’s salary covered the period 1
April 2006 to 31 July 2009. Auditors BDO Spencer Steward
(KZN)
Incorporated were tasked to carry out the investigations. Once their
investigations were finalized they submitted their report
to the
company. The company investigations also included meetings held with
the applicant for instance on 27 August 2009 and on
26 October 2009.
The board also formulated its written report to the complaints raised
by the applicant and gave him a copy. Further
correspondence was
exchanged between them. In an e-mail dated 3 November 2009 the
applicant confessed that he had signed 2 lease
agreements without
prior board approval.
[19]
Attorneys of Gerlicke & Bousfield Incorporated delivered a charge
sheet dated 17 December 2009 to have the applicant charged
with acts
of misconduct pertaining to the lease agreements. On 23 December 2009
the applicant also queried the none payment to
him of his 13
th
cheque. In a subsequent query dated 26 December 2009, the applicant
further indicated that he was seeking legal advice and would
act in
accordance with it. He indicated further that he had completed his
report for the JSE which included some allegations that
were not
appearing in his reports that go back to May 2009 which he said had
not been properly addressed by the board. He undertook
to supply a
copy of that report to Mr Wood and to the board. Mr Wood took the
position that he was being pressured to pay the applicant
the 13
th
cheque at a time when the company was not satisfied about the
explanation given by the applicant on his salary. The company was
taking a position that the applicant had been overpaid in excess of R
1 million which overpayment had been initiated at his instance.
[20]
On 4 January 2010 the applicant was handed a copy of the charge
sheet, with two charges and he was simultaneously suspended
pending
the disciplinary hearing. On the same day the applicant sent a report
containing his complaint to the JSE. On being suspended,
the
applicant was made to disclose his computer password. The company
instructed KPMG Services (Pty) Ltd to conduct an investigation
into
the contents of the applicant’s computer’s hard drive. A
forensic computer investigator and forensic technology
report dated
19 January 2010 was given to the company by KPMG that pornographic
material was found in the hard drive of applicant’s
computer.
On 20 January 2010 the applicant was served with an amended charge
sheet. It included a third charge being of fraud in
relation to his
salary and the fourth charge in relation to the abuse of computer
facility of the company. Parties exchanged e-mail
correspondence
which included a request by the applicant for a pre-dismissal
arbitration, a refusal thereof by the company and
a request by
applicant for further particulars.
[21]
The disciplinary enquiry of the applicant was scheduled for 20
January 2010. Before that date the applicant had unsuccessfully
applied for the postponement of the hearing. On 21 January 2010
attorneys instructed by the applicant threatened to interdict the
disciplinary proceedings. On the next day his attorneys initiated the
present application.
[22]
On 22 January 2010 the applicant attended the disciplinary hearing.
He applied for the hearing to be adjourned to secure legal
representation but the application was declined. He then took part in
the hearing. It was on the same day that this application
was before
this court. Parties agreed to have the urgent application adjourned
till 29 January 2010 so that, in the meantime opposing
papers and a
replying affidavit might be filed.
SUBMISSION
BY THE PARTIES
APPLICANT’S
SUBMISSION
[23]
The applicant originally sought relief in the form of a rule
nisi
as per paragraph 2 of the notice of motion. As the papers in
the matter are now complete it is submitted that a rule is no
longer
necessary and the applicant seeks only the interim relief as
contained in paragraph 2.2 of the notice of motion together
with an
order for costs as per paragraph 2.3. The form of the relief sought
is substantially the same as that granted by this Court
in
Grieve
v Denel (Pty) Ltd
.
The
relief sought is based on the provisions of the
Protected Disclosures
Act 26 of 2000
. As the relief is interim relief pending the final
determination of this matter by way of trial, the applicant need only
show a
prima facie
case at this stage, together with the further requirements for
interim relief.
[24]
The applicant contends that the disciplinary proceedings brought
against him on 4 January 2010 (as supplemented by extra charges
on 20
January 2010) constitute an “occupational detriment” in
terms of the PDA and were instituted by way of retaliation
against
protected disclosures made :
Ø
to the respondent on 4 August 2009;
Ø
to the Johannesburg Stock Exchange; and
Ø
to the respondent on or around 29 December
2009.
[25]
While maintaining that the report is distorted or manipulated
the respondent manifestly fails to substantiate this allegation or
deal with the contents of the report at all, save for the allegation
relating to contraventions of the Companies Act and the manipulation
of the respondent’s books in respect of a debit loan account of
Wood. The respondent relies in this regard on
the
contents of annexures “SW10” and “SW11” to
the opposing affidavit which are reflected in paragraphs
5 to
10 of annexure “D” to the founding affidavit.
[26]
Annexure “K” to the founding affidavit is the applicant’s
report of 4 August 2009. Annexure
“D” is the
respondent’s response thereto received on or about 12 October
2009. Annexure “F”
is the applicant’s reply
dated 24 November 2009. A perusal of the relevant portions of
these annexures reveals that
no explanation is given by the
respondent as to why:
Ø
Wood incurred personal expenditure on the
respondent’s account without authorisation from the Board,
thereby creating the
debit loan account in the first place;
Ø
this amount remained on the books
until set-off against payments allegedly made to Bugatti Trading;
Ø
The nature of the transactions and the
reasons why the amounts paid to Bugatti fail to be set off against
the loan account (it is
evident from
further
documents on record that Wood had personal dealings with and personal
liabilities to the owner of Bugatti Trading); and
Ø
Wood incurred personal expenditure on the
respondent’s account without authorisation from the Board,
thereby creating the
debit loan account in the first place;
Ø
this amount remained on the books until
set-off against payments allegedly made to Bugatti Trading;
Ø
The nature of the transactions and the
reasons why the amounts paid to Bugatti fall to be set off against
the loan account (it is
evident from further documents on record that
Wood had personal dealings with and personal liabilities to the owner
of Bugatti
Trading); and
Ø
The debit balance was arbitrarily allocated
to Wood’s salary without authorisation from the remuneration
committee.
[27]
In the circumstances, the applicant’s grave concerns as set out
in annexure “F” remain wholly
valid.
[28]
Between the service of the “charges”
on him and 20 January 2010 the applicant advised the respondent of
his intention
on a number of occasions and took a number of steps to
pursue his rights in the disciplinary enquiry. These are listed in
the chronology
which is attached to these heads of argument.
[29]
In any event, the applicant’s
bona
fides
are apparent from the following :
Ø
his repeated attempts to bring the
discrepancies to the respondent’s attention and the ample
opportunity given to the respondent
to deal with the issues (one of
the requirements of Section 9 of the PDA);
Ø
the fact that he was specifically employed
to monitor the respondent’s ethics and corporate governance
compliance and his
maturity, training and experience in this regard
(relevant factors in assessing the applicant’s good faith and
the fact that
he quite correctly, and wherever relevant, made full
disclosure in his reports of the breakdown of his relationship with
Wood,
the litigation between them and the investigations brought
against him by the respondent. This is precisely the
standard
of conduct one would expect from an experienced attorney.
[30]
Being subjected to “any disciplinary action” fulfils the
definition of an occupational detriment as
contained in Section 1 of
the PDA. The respondent, however, seeks to persuade the
Court that their conduct cannot constitute
an occupational detriment
because the charges brought against the applicant are not directly
related to the disclosures made.
The contention is unsound, few
employers would be foolish enough to bring directly related charges
against a whistle-blower.
[31]
It is submitted that it is apparent from the above that the
respondent’s actions were clearly retaliatory
measures to the
disclosures made by the applicant. It is accordingly submitted that
the applicant’s disclosures are protected
and the charges
against the applicant are an occupational detriment in terms of the
PDA.
[32]
The applicant has made out a
prima facie
case (even if
open to some doubt) and seeks interim relief interdicting a
disciplinary enquiry pending the resolution of the dispute
at trial.
In such circumstances the irreparable harm that the applicant will
suffer, the absence of an alternative remedy
and the balance of
convenience in his favour are inherent.
RESPONDENT’S
SUBMISSION
[33]
The respondent:
Ø
disputes that the applicant has satisfied
the several legal requirements (facta probanda) for relief under the
PDA;
Ø
disputes the applicant’s entitlement
to rely on the PDA at all.
[34]
The former dispute requires an extensive
examination of the facts. The latter is mainly an issue of law, the
relevant facts not
being in dispute. It will accordingly be dealt
with first.
[35]
Whether one categorises the issue as one of election or one of
estoppel, the outcome is the same. When the applicant
was called to
attend a disciplinary enquiry and to answer the charges (as amplified
from the original 2 charges with their alternatives),
he had two
choices, namely:
Ø
he could seek relief under the PDA; or
Ø
he could proceed with the disciplinary
enquiry.
[36]
But he could not do both, as they are incompatible with each other.
Indeed, the relief contemplated by the PDA
is designed to stop or
prevent a disciplinary enquiry. Between the service of the “charges”
on him and 20 January 2010
the applicant advised the respondent of
his intention on a number of occasions and took a number of steps to
pursue his rights
in the disciplinary enquiry. These are listed in
the chronology which is attached to these heads of argument. Pursuant
to the applicant’s
representation that he was taking steps to
participate in the disciplinary enquiry, the respondent prepared for
it, continued to
prepare for it, and incurred costs in doing so.
[37]
It was only when the application for a postponement was refused that
the applicant sought to rely on the other
remedy, namely proceedings
under the PDA. His conduct when he received the charge is
incompatible with what a reasonable person
would have done when
confronted with charges when he/she had made protected disclosures,
particularly where that person was the
legal officer of the company
and also in charge of Human Resources.
[38]
It is submitted that his conduct amounts to a clear election and that
the remedies under the PDA are therefore
no longer available to him.
The applicant is therefore not entitled to the declaratory order
sought by him and has failed to establish
the first requirement for
an interdict (a clear right). On this basis it is submitted that the
application falls to be dismissed
with costs, including the costs of
two counsel.
[39]
If the applicant were to rely on section 6 of the PDA
(disclosure to his employer), he would have to establish on a
balance
of probability the following (
facta
probanda
). The
facta
probanda
for a cause of action based on
that section are the following:
Ø
a disclosure;
Ø
made in good faith;
Ø
by the employee;
Ø
in accordance with the employer’s
prescribed or authorised procedure
Ø
to the employer of the employee
[40] It is submitted that
on the facts the applicant has failed to establish each of the
facta
probanda
as indicated
Ø
that he made a disclosure to his employer
(in relation to both the August and December events);
Ø
that he was bona fide – it is
submitted that he was actuated by malice against Mr Wood;
Ø
that he has been subjected to the
disciplinary proceedings ‘... on account of’ his having
made a protected disclosure.
[41]
The August “disclosure” was a regurgitation of a prior
disclosure made by another employee. It is therefore not
a disclosure
made to the employer by the employee. The
“disclosure”
made to the JSE is not a disclosure to the employer.
One
has to determine from the facts alleged by the applicant whether he
intended to make a disclosure to his employer – the
Board of
Directors of the respondent – as well as whether his actions
actually constituted making a disclosure to the Board
of Directors.
[42]
If the applicant had intended to make a disclosure to the Board of
Directors, one would have expected him to deliver the JSE
report to
the respondent’s office. But he left it at the MD’s house
when the MD wasn’t there, and did so after
the two of them had
exchanged communications with regard to his 13
th
cheque. His email of 26 December 2009 makes his attitude clear. He
uses the threat of a report to the JSE as leverage to extract
a
payment. He gave a clear indication that he did not intend to report
to the Board.
[43]
The applicant’s mala fides is apparent from the timeline. Until
the dispute arose between him and Mr Wood about his entitlement
to
shares, he made no disclosures. It is submitted that the
probabilities point to mala fides on his part, and that he has been
using the “protected disclosures” regime as a tool in an
effort to extract the disputed shares and the 13
th
cheque from Mr Wood (and now, to avoid facing a disciplinary
enquiry). The applicant made, or purported, to make disclosures only
when he found himself in a corner. This happened on three occasions.
Further, he pursued the disciplinary enquiry route
with some vigour, until he was stymied by a refusal of a
postponement.
[44] The timeline
suggests strongly that the disciplinary proceedings were not
instituted “on account of” the disclosures
the applicant
made (if they were indeed protected disclosures).He must show that
there was a demonstrable nexus between his making
the disclosure and
the disciplinary action. The applicant has failed in the founding
papers to establish these requirements by
evidence. To the contrary,
such evidence as there is shows quite strongly that he is using the
protected disclosures regime in
an endeavour to extract some personal
gain. It is submitted that the application should be dismissed with
costs, including the
costs of two counsel.
EVALUATION
[45]
The relief sought by the applicant is based on the provisions of the
PDA. It is an interim relief pending the final determination
of the
issues in this matter by way of a trial. The applicant needs only to
show:
(i)
a prima facie right even if it is open to some doubt;
(ii)
Irreparable harm or a reasonable
apprehension thereof, should the interdict not be granted; and
(iii)
the absence of an adequate alternative remedy. See
Young v Coega
Development Corporation (Pty) Ltd
2009 (6) SA 118
at para 16.
[46]
For the applicant to show that he has a prima facie right to the
relief he seeks, he has to show that he is entitled to be
protected
under the terms of the PDA and he has satisfied the legal
requirements for the relief he seeks.
[47]
The respondent opposed the application, as already pointed out on the
basis that the applicant has not met any of the two requirements.
ENTITLEMENT
TO PROTECTION
[48]
The submission by the respondent is that the applicant had to choose
between seeking a relief under the PDA or to proceed with
the
disciplinary enquiry, but that he could not do both. By attending the
disciplinary enquiry and taking part therein, without
placing any
reliance on the provisions of the PDA, the applicant is said to have
made his election and that he should be held to
it. This submission
is based on the view that the applicant could waive the protection
provided by the PDA. If the applicant can
not waive the protection
accorded by the PDA he may not be held to the election he made.
[49]
Where a statutory provision has been enacted for the special benefit
of an individual or body, it may be waived by that individual
or
body, provided that no public interests are involved. It matters not
whether that statutory provision is couched in peremptory
form. See
SACO-OP Citrus Exchange v Director-General Trade & Industry
[1997] ZASCA 6
;
1997 (3) SA 236
at 243
The
preamble to the PDA provides, inter alia:
“
Recognizing
that –
·
·
·
criminal and other irregular conduct in organs of state and private
bodies are
detrimental to good, effective, accountable and
transparent governance in organs of state and open and good corporate
governance
in private bodies and can endanger the economic stability
of the Republic and have the potential to cause social damage;
and
bearing in mind that: -
·
every employer and employee has a responsibility to disclose criminal
and any
other irregular conduct in the workplace;
·
every employer has a responsibility to take all necessary steps to
ensure that
employees who disclose such information are protected
from any reprisals as a result of such disclosure;
and
in order to-
·
create a culture which will facilitate the disclosure of information
by employees
relating to criminal and other irregular conduct in the
workplace in a responsible manner by providing comprehensive
statutory
guidelines for the disclosure of such information and
protection against any reprisals as a result of such disclosures”.
[50]
It must follow from the cited parts of the preamble that the PDA
involves public interests. That being the conclusion, the
applicant
could not therefore lawfully waive the applicability of the PDA by
electing to participate in the disciplinary hearing.
That ground of
the respondent based on election or estoppel must therefore fail.
THE
LEGAL REQUIREMENTS OF PDA
[51]
The representations made by the applicant were submitted by him to
the board of the company and later to the JSE. The board
is the
executing authority of the company and therefore submissions made to
it were made to the employer as referred to in section
6 of the PDA.
Section 8 of the PDA deals with protected disclosure made to certain
persons or bodies. The JSE is however not one
of the bodies as are
envisaged in section 8. That leaves a submission made to the JSE to
possibly fall within the ambit of section
9.
Sections
6 and 9 read:
“
6.
Protected disclosure to employer
(1)
Any disclosure made in good faith-
(a)
and substantially in accordance with any procedure prescribed, or
authorised by the employee's employer for reporting or otherwise
remedying the impropriety concerned; or
(b)
to the employer of the employee, where there is no procedure as
contemplated in paragraph (a), is a protected disclosure.
9.
General protected disclosure
(1)
Any disclosure made in good faith by an employee-
(a)
who reasonably believes that the information disclosed, and any
allegation contained in it, are substantially true; and
(b)
who does not make the disclosure for purposes of personal
gain, excluding any reward payable in terms of any law;
is a
protected disclosure if-
(i)
one or more of the conditions referred to in subsection (2) apply;
and
(ii)
in all the circumstances of the case, it is reasonable to make the
disclosure.
(2)
The conditions referred to in subsection (1) (i) are-
(a)
that at the time the employee who makes the disclosure
has reason to believe that he or she will be subjected to
an
occupational detriment if he or she makes a disclosure to his or her
employer in accordance with section 6;
(b)
that, in a case where no person or body is prescribed for
the purposes of section 8 in relation to the relevant
impropriety,
the employee making the disclosure has reason to believe that it is
likely that evidence relating to the impropriety
will be concealed or
destroyed if he or she makes the disclosure to his or her employer;
(c)
that the employee making the disclosure has
previously made a disclosure of substantially the same information
to-
(i)
his or her employer; or
(ii)
a person or body referred to in section 8, in respect of which no
action was taken within a reasonable period after the disclosure;
or
(d)
that the impropriety is of an exceptionally serious
nature.
(3)
In determining for the purposes of subsection (1) (ii) whether it is
reasonable for the employee to make the disclosure, consideration
must be given to-
(a)
the identity of the person to whom the disclosure is made;
(b)
the seriousness of the impropriety;
(c)
whether the impropriety is continuing or is likely to occur in the
future;
(d)
whether the disclosure is made in breach of a duty of confidentiality
of the employer towards any other person;
(e)
in a case falling within subsection (2) (c), any action which the
employer or the person or body to whom the disclosure was
made, has
taken, or might reasonably be expected to have taken, as a result of
the previous disclosure;
(f)
in a case falling within subsection (2) (c) (i), whether in making
the disclosure to the employer the employee complied with
any
procedure which was authorised by the employer; and
(g)
the public interest.
(4)
For the purposes of this section a subsequent disclosure may be
regarded as a disclosure of substantially the same information
referred to in subsection (2) (c) where such subsequent disclosure
extends to information concerning an action taken or not taken
by any
person as a result of the previous disclosure.
[52]
For the applicant to succeed with a relief based on section 6 of the
PDA he must prove:-
(i)
a disclosure
(ii)
made in good faith
(iii)
by the employee
(iv)
in accordance with the employers prescribed or authorized procedure.
(v)
to the employer of the employee.
[53]
The submission by the respondent is that the August “disclosure”
was a regurgitation of a prior disclosure made
by another employee.
That, it is therefore not a disclosure made to the employer by the
employee. This submission by the respondent
is far from the truth. A
reading of concerns raised by Mr Maechler reveals that he made
remarks of a general nature, raising areas
of concern but giving no
details in respect of each submission. Issues raised by the applicant
are somewhat detailed. The loan
account is but one example where he
dealt not only with what he perceived to be a discrepancy,
he
dealt as well with the explanation proffered on how the debt was
settled and why he felt the exploration was insufficient and
not
deserving of acceptance by the board. Mr Maechler had himself left
room for submissions by other staff members, in terms of
quantity and
quality of the submissions.
[54]
Both the August and December 2009 submissions were, in my view,
disclosures made to the employer, the board, by the employee.
In one
of the e-mails the applicant had indicated that he would submit a
report to the JSE but would furnish a copy to the company,
which he
subsequently did. The company was given a warning that such a
submission would be made. It decided to regard it as a leverage
to
force it to pay him the 13
th
cheque.
[55]
The August disclosure was made by the employee in accordance with the
employer’s prescribed or authorised procedure otherwise
the
board would not have chosen to respond to it.
[56]
The applicant initiated separate legal proceedings in which he
claimed an entitlement to shares. He appears to have deliberately
avoided one issue clouding another. He demanded a payment of the 13
th
cheque, failing which he said he would take legal steps, again
separating issues. As already said his disclosure contains some
details and are not just vague submissions which can be described as
intended only to hurt another. Some of his disclosures had
been
touched upon by Mr Maechler, again suggesting a lack of thumb sucking
exercise. The applicant appears to believe in the truth
of his
disclosure. The disclosure was first made to the board and when the
applicant was not satisfied about the type of response
given to them,
he escalated the disclosure to the JSE as the respondent is a public
company. His disclosure comes across as having
been made in good
faith. At trial he may success to prove it to be a protected
disclosure.
[57]
I conclude that the applicant has
prima facie
satisfied the
requirements outlined in section 6 of the PDA for purposes of this
application. This conclusion makes it unnecessary
to investigate
whether in addition; he satisfied the requirements of section 9.
Suffice to say that the disclosure does not appear
to have been made
for personal gain. By making the disclosures he ran the risk of
antagonizing the very person on whom the success
of his claims for
the shares and 13
th
cheque depended. He knowingly
ran the risk of being subjected to disciplinary measures. Making the
disclosure was in the
circumstances reasonable. Had it been
necessary, I would have found that he did satisfy the requirements of
the PDA as outlined
in section 9, for purposes of this application.
[58]
Further, the applicant has to prove that he has been subjected to an
occupational detriment on account, or partly on account,
of having
made a protected disclosure, see section 3 of the PDA. The history of
this matter indicates that it was after the applicant
had instituted
a High Court claim for shares that the respondent began to
investigate his pay structure. After the applicant had
circulated the
August 2009 disclosure the respondent suspended him and investigated
more claims against the applicant. The charge
sheet with two counts
had been prepared and delivered to the company on or about 17
December 2009, but was served on him after
he had made his
submissions to the JSE. The conclusion is irresistible that he has
probably been subjected to an occupational detriment
on account or
partly on account of having made a protected disclosure.
[59]
In my view, the applicant has shown the existence of a prima facie
right in the relief he seeks. He has further shown that
he ought not
to be subjected to a disciplinary hearing in the matter until such
time that this matter is properly heard and a decision
on it is made.
He has further shown that there is no other adequate alternative
remedy to address the irreparable harm that he
is likely to suffer
should the disciplinary hearing proceed.
The
following order will then issue.
(1)
The respondent is interdicted from proceeding with any disciplinary
action or enquiry against the applicant
on the charges as set out in
its charge sheet against the applicant of 20 January 2010 pending the
outcome of a dispute referred
to the Commission for Conciliation,
Mediation and Arbitration, and if the conciliation does not resolve
the dispute, pending the
adjudication of that dispute by the Labour
Court.
(2)
The Respondent is directed to pay the costs of this application.
_______________
CELE
J
Date
of hearing
: 29 January 2010
Date
of Judgment :
05 February 2010
APPEARANCES
For
the applicant :
Advocate Paul Schuman
Instructed
by
:
Stirling Attorneys
For
the respondent :
Advocate G.G Marnewick SC
with L.R Naidoo
Instructed
by
:
Garlick & Bousfiled
Inc.